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> I have got to think that Soft Bank knew/knows the valuation was off. For private rounds valuation is part of the equation, but liquidation preferences and ra

> I have got to think that Soft Bank knew/knows the valuation was off. For private rounds valuation is part of the equation, but liquidation preferences and ratchets are likely more important. As the famous finance saying goes "You set the price - I set the terms, you set the terms - I set the price". SoftBank has negotiated downside protection. Everything from there is just gravy on top. The press never seems to discriminate between preferred and simple shares, so why not reach for the moon, e.g. https://www.latimes.com/business/la-fi-hy-uber-ipo-20181016-story.html https://www.latimes.com/business/la-fi-hy-uber-ipo-20181016-...

skinnymuch 7y ago
What major downside or any protections does SoftBank have with WeWork right now? Is there anything they are getting now or likely to get that doesn’t still have them $7B or so down the hole for WeWork? The major thing is usually first dibs if the company sells for a lot less than the later valuations. In this case that doesn’t seem likely to happen with Softbank getting back most of their investment
- prostoalex 7y ago
  https://www.cnbc.com/2019/09/24/softbank-has-a-multi-million-dollar-protection-in-weworks-ipo.html https://www.cnbc.com/2019/09/24/softbank-has-a-multi-million...
  - greenyoda 7y ago
    That article says: >The [ratchet] provision could grant existing shareholders $200 million to $500 million worth of additional shares, most of which would go to SoftBank, Kennedy said. For example, if WeWork’s market cap came in at less than $14.5 billion post-IPO, the total value of additional shares issued to SoftBank under the provision would be more than $400 million. $400 million doesn't seem to be much of a compensation for losing billions of dollars in investments. And that assumes that the company will IPO before it goes bankrupt (e.g., from investors pulling the plug on any future investments to cut their losses).
    - prostoalex 7y ago
      Yeah, it doesn't de-risk the investment as far as bankruptcy, but SoftBank's exposure is $10.5 bln, according to https://www.nytimes.com/2019/01/07/business/softbank-wework.html https://www.nytimes.com/2019/01/07/business/softbank-wework.... so any valuation above $10 bln would be a break-even for them.

skinnymuch 7y ago

What major downside or any protections does SoftBank have with WeWork right now? Is there anything they are getting now or likely to get that doesn’t still have them $7B or so down the hole for WeWork? The major thing is usually first dibs if the company sells for a lot less than the later valuations. In this case that doesn’t seem likely to happen with Softbank getting back most of their investment

prostoalex 7y ago
https://www.cnbc.com/2019/09/24/softbank-has-a-multi-million-dollar-protection-in-weworks-ipo.html https://www.cnbc.com/2019/09/24/softbank-has-a-multi-million...
- greenyoda 7y ago
  That article says: >The [ratchet] provision could grant existing shareholders $200 million to $500 million worth of additional shares, most of which would go to SoftBank, Kennedy said. For example, if WeWork’s market cap came in at less than $14.5 billion post-IPO, the total value of additional shares issued to SoftBank under the provision would be more than $400 million. $400 million doesn't seem to be much of a compensation for losing billions of dollars in investments. And that assumes that the company will IPO before it goes bankrupt (e.g., from investors pulling the plug on any future investments to cut their losses).
  - prostoalex 7y ago
    Yeah, it doesn't de-risk the investment as far as bankruptcy, but SoftBank's exposure is $10.5 bln, according to https://www.nytimes.com/2019/01/07/business/softbank-wework.html https://www.nytimes.com/2019/01/07/business/softbank-wework.... so any valuation above $10 bln would be a break-even for them.